MTKG Ch 20

Glenn is shopping for a new coat at Marshalls and finds a North Face down jacket that he really likes. He knows that the North Face brand is considered to be high quality and that it's usually very expensive. He's pleasantly surprised to see the price—the "suggested retail price" is $199 and Marshalls' price is $99. Glenn decides to purchase the coat even though it's a little more expensive than he originally thought he'd spend on the jacket. What type of pricing strategy is Marshalls using to price the North Face jacket and other merchandise? a. Price leaders b. Special-event pricing c. Odd-even pricing d. Comparison discounting e. Internal reference pricing

d. Comparison discounting

A price-skimming strategy assumes that a. the initial demand is highly inelastic. b. the product is efficient. c. it will be difficult to recoup development costs. d. all consumers have homogeneous tastes. e. the initial demand is highly elastic.

a. the initial demand is highly inelastic.

Adidas is establishing a ______ pricing objective to maintain or increase its product's sales in relation to total industry sales. a. market share b. status quo c. return on investment d. product quality e. survival

a. market share

_____________ is pricing a product at a moderate level and positioning it next to a more expensive model or brand. ​ a. ​Reference pricing b. ​Prestige pricing c. ​Odd-even pricing d. ​Customary pricing e. ​Professional pricing

a. ​Reference pricing

If Kashi wants to gain a large market share quickly with its new line of reduced-fat snack crackers, it should use a. captive pricing. b. penetration pricing. c. price skimming. d. random discounting. e. everyday low pricing.

b. penetration pricing.

Scenario 20.1 Use the following to answer the questions. ​ Suppose that Maui Jim is considering a new line of sunglasses that would be sold in major department stores. The new line would be positioned as a more distinctive brand than the typical sunglasses sold through department stores, and would be priced higher than other brands in the store, but a lower price line than the current Maui Jim lines that are sold through specialty stores. In determining the price for this sunglass line, Maui Jim wants to gather information about all brands sold in department stores and about customers' perceptions of those brands. Refer to Scenario 20.1. Given Maui Jim's plan for positioning the new sunglass line, it should use a ____ strategy when introducing its new product. a. promotional b. price-skimming c. reference d. penetration e. secondary-market

b. price-skimming

Which of the following pricing strategies often results in a retailer losing money on the product? a. Special-event pricing b. Penetration pricing c. Price leader d. Psychological discounting e. Ethical pricing

c. Price leader

Which pricing objective de-emphasizes price and can lead to a climate of nonprice competition in an industry? a. Return on investment b. Market share c. Status quo d. Cash flow e. Survival

c. Status quo

When a seller's costs are usually determined during or after a product is made and then a specified percentage or dollar amount is added to the cost to establish a price, an organization is using ____ pricing. a. demand-based b. differential c. cost-plus d. markup e. expense-based

c. cost-plus

Amtrak is considering two pricing strategies for its service. One is to price its train tickets so that it is less expensive to travel on weekends than during the week when there is heavy business travel, which illustrates _____ pricing. The second is to price its train tickets so that the further away the travel date, the greater the discount, which is best described as _____. a. demand-based; secondary market pricing b. cost-plus; secondary markup c. demand-based; differential pricing d. demand-based; periodic discounting e. cost-plus; periodic discounting

c. demand-based; differential pricing

All of the following are pricing strategies used by companies establishing prices of multiple products within a product line except a. price lining. b. bait pricing. c. captive pricing. d. penetration pricing. e. premium pricing.

d. penetration pricing.

A product is a price leader when a. an increase or decrease in price leads to increased revenue or lower costs. b. its price leads the industry in sales. c. its price maximizes profits. d. it is sold at less than cost in the hope that sales of other products will increase. e. it is sold at the highest price.

d. it is sold at less than cost in the hope that sales of other products will increase.

Reference pricing is a. pricing a product at a moderate level and positioning it next to a more expensive model or brand. b. using prices in advertising so that customers will have a point of reference when they come to the retail store. c. mentioning the price that other retailers charge for the same product on the display for the product. d. listing the manufacturer's suggested retail price on the price tag along with the store's lower price. e. using a consumer's internal perceptions of what the appropriate price should be to help price a firm's products.

a. pricing a product at a moderate level and positioning it next to a more expensive model or brand.

Maintaining a certain market share, meeting competitors' prices, maintaining a favorable image, and achieving price stability are all associated with a ____ pricing objective. a. status quo b. profit c. survival d. market share e. product quality

a. status quo

Which of the following pricing objectives sets prices to recover cash as quickly as possible? a. Market share b. Cash flow c. Product quality d. Return on investment e. Profit

b. Cash flow

Which of the following bases for pricing is most commonly used by retailers? a. Cost-plus pricing b. Markup pricing c. Differential pricing d. Demand-based pricing e. Negotiated pricing

b. Markup pricing

If Albertsons Market advertise 2-liter bottles of Coca-Cola for 89 cents to generate store traffic so that shoppers will purchase other items at regular prices, the grocer is using a. professional pricing. b. a price leader. c. reference pricing. d. special-event pricing. e. comparison discounting.

b. a price leader.

Services that are performed by lawyers, dentists, or doctors are typically priced using ____; sometimes these prices are not based on the amount of time that is spent in each situation, but are based on a flat fee regardless of the difficulty involved. a. everyday low pricing b. price lining c. professional pricing d. traditional pricing e. customary pricing

c. professional pricing

If a product is priced based on how many or how few people want it at a particular time and place, ____ pricing is being used. a. markup b. differential c. demand-based d. peak e. competitive

c. demand-based

When determining markup as a percentage of cost, divide the markup amount by a. cost. b. price. c. revenue. d. 100. e. quantity.

a. cost.

The fact that senior citizens are charged a lower price at movie theaters than younger adults is an example of ____ pricing. a. differential b. professional c. price-line d. promotional e. psychological

a. differential

When Texas Instruments first introduced its line of graphing calculators, it set the price quite high; it has lowered the price as competitors have entered the market. The pricing strategy initially used by Texas Instruments is called a. price skimming. b. odd-even pricing. c. prestige pricing. d. penetration pricing. e. customary pricing.

a. price skimming.

Euan is planning three sales during the third quarter of the year at Party City. The first is at a week before Easter, the second is the week before Halloween, and the third is Black Friday. These sales would be considered to be a. calendar discounting. b. sales promotion pricing. c. captive pricing. d. special-event pricing. e. psychological pricing.

d. special-event pricing.

A retailer of Degree antiperspirant prices it at $4.00; it costs the retailer $3.50. What is the approximate markup as a percentage of selling price? a. 49% b. 14.3% c. 3.5% d. 20% e. 12.5%

e. 12.5%

During the hot, humid months of July and August, Pinewood Links Golf Course, located in Georgia, offers weekday rates of $13 for a round of golf with a cart. During the rest of the year, the weekday rates are between $25 and $35. This is an example of the use of a. cost-based pricing. b. competition-based pricing. c. random discounting. d. premium pricing. e. demand-based pricing.

e. demand-based pricing.